The U.S. Justice Department
on Thursday gave the green light on the merger of Alltel with Verizon Wireless
, the 5th largest wireless provider in the United States, would then become a part of Verizon Wireless
, the 2nd largest (after AT&T
). The merger should then make Verizon the largest U.S. cellular carrier with some 80 million subscibers.
But the DOJ is requiring Verizon to divest assets in 22 states, including service in all of North Dakota and South Dakota; large portions of Colorado, Georgia, Kansas, Montana, South Carolina, Utah and Wyoming; and parts of Alabama, Arizona, California, Idaho, Illinois, Iowa, Minnesota, Nebraska, Nevada, New Mexico, North Carolina, Ohio, and Virginia.
Verizon plans to pay Alltel about $5.9 billion for equity in the company, but it will also take on about $22.2 billion in debt. Alltel incurred most of this debt when it was taken over in a leveraged buyout last year.
Investors have been concerned that the acquisition has gotten too expensive as debt financing costs have risen. But Verizon’s CEO Ivan Seidenberg assured them during the company’s quarterly conference call this week that Alltel is still a good purchase and would pay for itself in the long run.
Verizon is the second-largest mobile carrier in the United States, with 70 million subscribers in 49 states, after AT&T Mobility with 75 million subscribers. Alltel, the fifth-largest mobile carrier in the United States, has about 13 million subscribers in 35 states.
The $28.1 billion deal, which was announced in June, still needs approval from the Federal Communications Commission. The agency is expected to vote on the acquisition at its November 4th meeting.
The Public Interest Spectrum Trust, comprised of six organizations, has balked at an order proposed last week by FCC Chairman Kevin J. Martin to approve the merger, reports the Washington Post. Ben Scott, policy director at Free Press, said Verizon’s promises to open their networks to any devices and technologies hasn’t come to fruition.
The merger would create the nation’s largest cellphone carrier, with 80 million subscribers.